The United States stock markets faced a significant downturn on Monday, April 7, 2025, as investors reacted to the implementation of new tariffs by the Trump administration. By 10:39 AM (Brasilia time), the Dow Jones Industrial Average had fallen by 1,445.68 points, or 3.77%, while the S&P 500 dropped 205.21 points, or 4.04%. The Nasdaq Composite also suffered, plummeting 678.28 points, or 4.35%. This decline reflects ongoing concerns about the economic implications of the tariffs and potential retaliatory measures from trading partners.
The 10-year Treasury yield rose to 4.024%, indicating a flight to safety among investors amid fears of a prolonged trade war. The uncertainty surrounding the tariffs has led to predictions of increased volatility in the markets, with experts warning that the S&P 500 and Nasdaq could enter a bear market—defined as a drop of 20% or more from recent highs.
In the commodities market, West Texas Intermediate crude oil for May saw a decline of 2.24%, settling at $60.60 per barrel, while Brent crude for June fell 2.17% to $64.16 per barrel. The drop in oil prices came after the Trump administration's tariffs affected global trade dynamics and amid an increase in production from OPEC+. Since January, Brent crude has fallen from $82.63 to $63.01, reflecting decreased demand and rising supply.
The economic landscape is further complicated by a report indicating that Asia's oil imports decreased in the first quarter of 2025, dropping to 26.44 million barrels per day from 27.08 million in 2024. Although March showed a recovery driven by lower prices and stock replenishment, tariffs and economic uncertainties could dampen future demand.
Gold prices, however, saw a slight increase, rising 0.38% to $3,047.00. Meanwhile, the most traded iron ore contract on China's Dalian Commodity Exchange closed down 3.36% at $104.31 per metric ton.
As the day unfolded, the financial sector remained under pressure. Major banks like JPMorgan Chase, Morgan Stanley, Bank of America, and Wells Fargo saw declines of 3.9%, 3.8%, 2.8%, and 2.9%, respectively. Jamie Dimon, CEO of JPMorgan, warned that the tariffs would likely drive inflation and increase the risk of a recession, raising the bank's recession probability forecast to 60%.
In the tech sector, Apple experienced the largest weekly loss in market value in history, shedding $443.5 billion. Shares dropped 13.6% over the week, reflecting the impact of a 34% tariff on American products imposed by China as retaliation against U.S. tariffs.
Chinese tech giants also felt the heat, with Alibaba shares down 7.7%, PDD falling 5.2%, and JD.com slipping 7.1%. The defense sector was not spared either, with stocks of Lockheed Martin, General Dynamics, and Northrop Grumman dropping between 1.1% and 2.8%.
Airlines faced a grim outlook as well, with American Airlines, Southwest Airlines, United, and Delta seeing declines of 4% to 5%. Analysts predict that these companies may lower their revenue forecasts for 2025 due to the anticipated drop in travel demand.
Adding to the turmoil, Tesla's shares fell 5.8% after a 10.42% drop on the previous Friday, marking a 50% decline from its peak. Analyst Dan Ives of Wedbush reduced Tesla's price target from $550 to $315, citing tariffs and a crisis of image as contributing factors to a "perfect storm" for the company.
Nvidia shares fell 5.5%, following a 7.36% drop last Friday, compounding a weekly decline of 14%. The pharmaceutical sector also struggled, with Eli Lilly and Novo Nordisk down 5.2% and 1.8%, respectively, due to new restrictions on obesity medications under Medicare and Medicaid.
In the broader market, futures for major Wall Street indices continued to slide, with the S&P 500 futures down 1.97% and the Nasdaq 100 futures down 2.15%. The sharp declines in recent sessions have pushed the Nasdaq into bear market territory, while the Dow has fallen more than 10% from its record close.
As the week progresses, economic indicators will be closely watched, with a consumer credit report set to be released later today. Analysts anticipate an increase of $15.2 billion, slightly below the previous month's $18.1 billion.
Overall, the mood in the markets remains tense, with investors grappling with the ramifications of the ongoing trade war and the potential for a recession. The effects of the tariffs are expected to ripple through various sectors, raising concerns about inflation and economic growth.
As the financial world braces for further developments, the coming days will be crucial in determining the trajectory of the markets and the broader economy.
